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The City of London is paying £20m for an equity release firm

A London-based provider of home reversion and equity release services has conditionally agreed to be acquired by The City of London Group (COLG) it has been announced.

The AIM-listed investment firm has said it hopes to acquire Milton Homes, which helps the over 55s release the equity locked up in their homes, for £20.2m in a reverse takeover deal funded through £13.2m in new ordinary shares in COLG and £7m in cash

Following the proposed deal, it said that DV4 would hold 51% of the enlarged issued share capital of COLG.

Commenting on the transaction, Paul Milner, Chairman of COLG, said: “The Board believes that the acquisition of Milton Homes presents the Company and its shareholders with an attractive opportunity to acquire a business in the equity release sector.

“Building on the potential that exists within CAML, Milton Homes will enable the Group to develop a broad based financing business and moreover the additional balance sheet strength will give access to a wider range of funding lines.”

Colin Wagman, deputy chairman of Delancey and Chairman of Milton Homes, said that he was delighted that DV4 would remain as a majority shareholder in the business following the transaction and that the takeover would help to unlock even greater prospects for the business.

He said: “This acquisition is very positive for all of the parties. Milton Homes now has the opportunity to advance its business prospects with access to a wider pool of capital and to provide it with more profile to enable it to expand its equity release products.

“Following the transaction, the existing shareholders will retain a substantial involvement in the future of the business.”